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The market’s win streak may be just beginning. “It’s got an awfully good track record as a contrary indicator.” Each time the index last year spiked to either record or near record highs, Yardeni found the S&P 500 Index entered correction territory. The S&P 500 closed out the third week of January out of correction. He predicted the S&P 500 will be 15 percent higher from current levels by year’s end.

Edward Yardeni, who spent decades on Wall Street running investment strategy for firms such as Prudential and Deutsche Bank, predicts stocks will break out to all-time highs this year.

He’s partly building his bull case based on a chart pointing to negative market sentiment.

“At the end of last year the bull-bear ratio, which is something we watch from Investors Intelligence, fell below one,” the Yardeni Research president told CNBC’s “Trading Nation” on Friday. “It’s got an awfully good track record as a contrary indicator.”

Each time the index last year spiked to either record or near record highs, Yardeni found the S&P 500 Index entered correction territory. It appears an opposite trend is unfolding right now.

“Bearishness was just so widespread that the market had a technical bounce, and now the fundamentals are going the right way,” added Yardeni.

It’s a scenario he predicted on “Trading Nation” on Dec. 26 as stocks were staging a historic rebound from the Christmas Eve meltdown. According to Yardeni, investors were too pessimistic about a recession, the Federal Reserve’s interest rate policy and the U.S.-China trade war.

“A lot of these things seem to be coming around in the right direction here, and so the markets have done extremely well,” he said.

The S&P 500 closed out the third week of January out of correction. The index now on its longest win streak since August — up four weeks in a row on signs U.S.-China trade tensions may be abating and encouraging fourth quarter earnings reports.

Yardeni said those factors are ultimately driving a year-long powerful market rebound. He predicted the S&P 500 will be 15 percent higher from current levels by year’s end.

“I’m still sticking with 3100 and feel better about it,” said Yardeni, who noted valuation multiples, low interest rates and inflation is setting Wall Street up for a very good year.

Baidu ended the year with a 32 percent loss, while Tencent was down 23 percent, and Alibaba dropped 21 percent. And it’s Tencent that’s flashing a buy signal, says Craig Johnson, chief market technician at Piper Jaffray. “If I look at the chart of Tencent, here’s a stock that’s traded off meaningfully. A key technical indicator, its moving average convergence divergence (MACD), is also suggesting a bullish lean to the stock, says Johnson. A stock’s MACD demonstrates the correlation between a 26-

Even with the U.S.-China trade war still raging, Chinese stocks are on fire.

Increasing trade tensions between the U.S. and China through the back-half of 2018 took a sledgehammer to Chinese shares. Baidu ended the year with a 32 percent loss, while Tencent was down 23 percent, and Alibaba dropped 21 percent.

However, the FXI China large-cap ETF has surged 7 percent in the past three months, while U.S.-listed China-based stocks such as Baidu, Alibaba, Tencent and Sina have rallied by at least 8 percent to begin 2019. And it’s Tencent that’s flashing a buy signal, says Craig Johnson, chief market technician at Piper Jaffray.

“There’s certainly some opportunities to trade here,” Johnson said on CNBC’s “Trading Nation” on Friday. “If I look at the chart of Tencent, here’s a stock that’s traded off meaningfully. We’ve now just reversed the downtrend.”

Tencent had plummeted 47 percent from its January peak last year to its trough last October. Since that bottom, it has rallied 35 percent to four-month highs.

A key technical indicator, its moving average convergence divergence (MACD), is also suggesting a bullish lean to the stock, says Johnson. A stock’s MACD demonstrates the correlation between a 26-period exponential moving average and a 12-period exponential moving average. When measured against a baseline, the indicator can suggest bullish or bearish momentum.

“When we’ve seen a MACD buy signal happen like we have right here, we’ve seen that 30 days later that the stock is typically up almost 13 percent,” Johnson explained. “This would be one we’d be buying.”

Five experts weigh in on whether it’s a challenge Musk and Tesla can overcome:· Oppenheimer managing director Colin Rusch agrees with Jed Dorsheimer on Tesla’s job cuts, but isn’t bullish on what they’ll accomplish. The other thing that we think they’re going to end up doing is ramping up this factory in China, we think people are going to get bullish on that.” · Needham’s Raji Gil thinks that Tesla may have overestimated how many people can actually afford a high-end electric vehicle. I think t

Tesla shares took a big hit to end the week after CEO Elon Musk announced that the company would cut 7 percent of its workforce in order to cut costs as the company prepares to ramp up production and boost margins as they get closer to releasing the long-awaited $35,000 version of the Model 3.

Musk says Tesla faces “an extremely difficult challenge” in making their products a competitive alternative to traditional vehicles, adding that he expects Q4 profit to come in significantly lower than Q3.

Five experts weigh in on whether it’s a challenge Musk and Tesla can overcome:

· Oppenheimer managing director Colin Rusch agrees with Jed Dorsheimer on Tesla’s job cuts, but isn’t bullish on what they’ll accomplish. “This reduction in force should have been anticipated. This is very similar to what we saw on the front end of the Model S, where they had some aggressive hiring and additional staff to make the ramp successful. Today, we’re seeing them pare back the headcount in the same way…” Rusch also says that even though there is a “real market of size” for the current iteration of the Model 3, it’s not enough to keep Tesla growing. “For them to see the growth that’s expected by the Street, they do need to get the price down to $35,000. I see that as an extraordinarily difficult thing for them to accomplish, I actually don’t think they will accomplish that.”

· Canaccord Genuity’s Jed Dorsheimer thinks the workforce cut is just fine, calling it “clean-up” after the company’s latest push to ramp up Model 3 production came with a wealth of new hires. “It’s not a huge surprise to see this,” Dorsheimer observes. “Obviously you never want to see a growth company cutting staff like this, but we’re not overly concerned.” Right now, he sees a scenario where Tesla’s Q4 numbers could be great even with a lower-than-expected EPS result. “They cleared out a fair amount of inventory in the fourth quarter, so they cash flow number we think can surprise to the upside still, even with a lower EPS number. The other thing that we think they’re going to end up doing is ramping up this factory in China, we think people are going to get bullish on that.”

· “They’re certainly in a better position than they were eight or nine months ago,” says ROTH Capital’s Craig Irwin. “Where we’re going to see pressure on the stock today is the ‘copy-paste’ expectations of Q3 going through 2019 need to be reset…” But even though Tesla might be healthier now than at this point in 2018, the challenges in front of them are many. “We’re early days in who’s going to win this war in electric vehicles, and you’ve got a lot of new entrants coming in, and so it’s tough to pick the winner right now.”

· Needham’s Raji Gil thinks that Tesla may have overestimated how many people can actually afford a high-end electric vehicle. “Clearly, in my mind, they have an issue with demand,” says Rusch, ” If you do the math… you have to conclude that 90 percent of the reservations that have been built up over the past couple of years are folks that wanted the standard battery version of the vehicle, which is $35,000.” That version does not yet exist, and with the Federal EV tax credit being phased out, Rusch says time could be running out for Tesla to deliver their as-yet mythical car. “Once the credit starts to expire and we go into Q1 and Q2, and they cannot produce the cheaper version of the vehicle in time, do we see a pick-up in cancellations?”

· Westly Group founder Steve Westly loves where Elon Musk’s company is right now, calling Tesla “the iPhone of electric vehicles,” and saying they’re well ahead of the game when it comes to a quickly-changing auto market. “Virtually every automaker in virtually every country in the world is moving all-electric, and Tesla’s frankly in the pole position. They’re winning,” he says. “The challenge now is, after they’ve really won the high-end market in the U.S., how quickly can they go international? I think they’re very well-positioned for that… and how quickly can they get to that mass market $35,000 vehicle with a 250-mile range? I think Tesla’s going to win that race.”

Home Depot, Lowe’s break down, but one could break out 4:41 PM ET Thu, 17 Jan 2019 | 02:33Big box retailers Home Depot and Lowe’s are getting beaten down. One of those home repair retailer’s stocks is a hair from breaking a key support level, says Todd Gordon, founder of Trading Analysis.com. “If you take a look at the [Lowe’s] chart, you can see that we are very well contained in a parallel channel,” Gordon said on CNBC’s “Trading Nation” on Thursday. Gordon says a break below that trend channe

The two are tracking for a weekly loss of at least 2 percent, their first negative week in a month, after J.P. Morgan trimmed its price target on Home Depot. Analysts reconsidered profit estimates on the retailer on softening housing trends and a warning from paint company Sherwin-Williams.

One of those home repair retailer’s stocks is a hair from breaking a key support level, says Todd Gordon, founder of Trading Analysis.com.

“If you take a look at the [Lowe’s] chart, you can see that we are very well contained in a parallel channel,” Gordon said on CNBC’s “Trading Nation” on Thursday. “Lowe’s is actually right on the lows of this three-year uptrend here.”

Gordon says a break below that trend channel at around $90 would spell trouble for the retailer. At $92.05 in Friday’s premarket, the stock is just 2 percent higher than that support.

The move to the lower-end of the channel “is interesting, too, because we’re seeing a boost in real estate,” Gordon said. Referring to the real estate investment trust ETF, he added: “The XLRE, as yields are dropping here, there’s rotation into housing. Lowe’s isn’t seeing any benefit from that.”

The REIT sector is the only positive S&P 500 group in the past three months. The XLRE REITs ETF has added 5 percent this month, better than Home Depot’s 2 percent advance and a flat start for Lowe’s.

Strategic Wealth Partners President Mark Tepper says the state of the consumer and rising home prices should drive gains in Home Depot and Lowe’s in coming months.

“When housing prices are going up, that’s good for home-improvement stocks because it gives the consumer the confidence that they need that they can put money into their homes and actually get something in return,” Tepper said on Thursday’s “Trading Nation.”

Of the two stocks, Tepper does have more faith in a Lowe’s breakout.

“Lowe’s is more of a turnaround story, so I think it has more upside. They’ve got a new CEO in place who is revamping the management team, and they’re really focusing now on improving execution and streamlining the business,” he said, referring to Marvin Ellison, who became Lowe’s chief in July.

Lowe’s has performed slightly better than Home Depot in recent months. While Home Depot declined by 13 percent since mid-July, Lowe’s has dropped 8 percent.

Small caps are having their best start to a year since 1987 4:34 PM ET Thu, 17 Jan 2019 | 04:11The Russell 2000 is having its best start to the year since 1987. “Small caps were way oversold, but now they’ve outperformed since the market bottomed in December,” Tepper said Thursday on CNBC’s “Trading Nation.” “But in this stage in the economic cycle, I’d be favoring large caps over small caps.” “Large caps typically outperform small caps late cycle,” he said. Beyond that, wages are going up and t

Small caps are having their best start to a year since 1987 4:34 PM ET Thu, 17 Jan 2019 | 04:11

The Russell 2000 is having its best start to the year since 1987.

The index of small-cap stocks has gained more than 8 percent year to date — a far cry from its 2018 performance, when the index saw its worst annual loss since the financial crisis.

But the recent strength may just be a head fake. According to TradingAnalysis.com founder Todd Gordon and Strategic Wealth Partners’ Mark Tepper, investors should look elsewhere for value.

“Small caps were way oversold, but now they’ve outperformed since the market bottomed in December,” Tepper said Thursday on CNBC’s “Trading Nation.” “But in this stage in the economic cycle, I’d be favoring large caps over small caps.”

Smaller companies are typically more susceptible to economic cycles. They usually hold more debt than their large-cap peers, which means they are especially sensitive to factors like rising rates and wage inflation.

Since Tepper believes we could be nearing the end of this historic bull run, he thinks Russell 2000 companies might have a tough road ahead.

“Large caps typically outperform small caps late cycle,” he said. “When the economy slows and eventually contracts, those companies with high debt levels are going to get hit the hardest. Cash flow slows, rates go up, and that’s a recipe for trouble. Beyond that, wages are going up and that’s going to eat into margins.”

Despite the strong start to the year, the Russell 2000 is still in correction territory, with shares more than 16 percent from their record high last August.

Like Tepper, TradingAnalysis.com founder Todd Gordon doesn’t believe the index is firmly in an uptrend. After examining a chart of the IWM, an ETF that tracks the index, he doesn’t think it’s about to break out to the upside. He is, however, watching one key level as a potential strength indicator.

The IWM’s 200-day moving average is $158, which is about 7 percent higher than where it was trading Thursday. To reach that key level, Gordon says, it will first have to break above its October and November lows.

“The 200-day moving average is right around $158, so we have some wood to chop to get to retest that moving average which was lost,” he said. “We have old lows here in October and November. That’s going to be overhead supply. Anybody who bought those lows would certainly be selling or offering into those levels. So we’ve got to chop up through there.”

If the IWM can top that key $158 level he thinks that “new longs coming in” could potentially drive the ETF higher. It was above $146 in Friday;’s premarket.

The stock would need to pull back to one key level before it can roar back to records, though, says Todd Gordon, founder of TradingAnalysis.com. “I can’t wait to buy it in a pullback and I hope I get it back towards around $330 to $325. I do hope we hit that oversold pullback in order to take us to new highs,” Gordon told CNBC’s “Trading Nation” on Thursday. That swing to the downside could come as soon as Friday given the high potential for volatile swings following earnings, says Gordon. A mov

It has rallied more than 30 percent in January in the best performance of a FANG stock by a mile.

The stock would need to pull back to one key level before it can roar back to records, though, says Todd Gordon, founder of TradingAnalysis.com.

“I can’t wait to buy it in a pullback and I hope I get it back towards around $330 to $325. I do hope we hit that oversold pullback in order to take us to new highs,” Gordon told CNBC’s “Trading Nation” on Thursday. “It’s so extended here. You can’t buy it, it’s hard to sell it so that’s why I like trading options right now.”

That range has acted as resistance since Netflix last hit a low of $310 in August 2018. It broke firmly above it this week. A drop back down to $325 represents an 8 percent selloff.

That swing to the downside could come as soon as Friday given the high potential for volatile swings following earnings, says Gordon. The options market is expecting a $27 move higher or lower. A move that large to the downside would take Netflix prices down to Gordon’s $325 a share buy signal.

Mark Tepper, president of Strategic Wealth Partners, is a long-term bull on Netflix, but its outsized move in recent weeks has him nervous.

“I would be a seller of this thing ahead of earnings. It’s up 50 percent since Christmas Eve so I think a lot of the good news has already been priced in,” Tepper said on “Trading Nation” on Thursday.

The company’s announcement of a price hike days before its earnings release also has Tepper concerned.

“The timing of that price hike strikes me as very, very odd. Rolling that out a few days before earnings has me wondering. It has me concerned that they might underwhelm us on subscriber growth,” he explained.

Netflix said on Tuesday that it would raise prices for its subscription plans. The most popular plan will now cost $13 a month, up from $11, in what was its largest increase ever.

Transports pick up steam in best January in six years 3:14 PM ET Wed, 16 Jan 2019 | 03:31Transports are delivering solid gains so far this month. The IYT transportation ETF is tracking for its best January since 2013 with stocks like Avis Budget, Union Pacific and JetBlue moving higher. However, options traders are hedging for the worst. A drop of at least 30 percent in the railroad stocks would take the S&P industry down to levels not seen since the beginning of 2017. Disclosure: Erin Gibbs doe

Transports pick up steam in best January in six years 3:14 PM ET Wed, 16 Jan 2019 | 03:31

Transports are delivering solid gains so far this month.

The IYT transportation ETF is tracking for its best January since 2013 with stocks like Avis Budget, Union Pacific and JetBlue moving higher.

However, options traders are hedging for the worst.

Stacey Gilbert, head of derivative strategy at Susquehanna, said that while she does not anticipate a recession, activity in the options market suggests investors are protecting against any possible economic downturn this year.

“Your railroad stocks certainly could have 30 to 40 percent downside if there were a recession – we’re not seeing signs that’s what is coming,” Gilbert told CNBC’s “Trading Nation” on Wednesday. “Trucking and logistics names probably you could be looking at 20 percent downside — again, that’s not what’s there but we think that’s what some of the flow has been to protect against.”

A drop of at least 30 percent in the railroad stocks would take the S&P industry down to levels not seen since the beginning of 2017. A 20 percent decline in the air freight and logistics industry would bring it to late-2013 lows.

For the long term, Gilbert said three names have sparked Susquehanna’s interest – freight company C.H. Robinson, railroad stock Union Pacific, and airline Delta. Susquehanna analysts have buy ratings on all three of those stocks.

“We definitely think that there are names in transports. You can’t own the basket, you’ve got to pick your favorites and we do have some that are out there,” said Gilbert.

Erin Gibbs, portfolio manager at S&P Global, agrees that investors should not take the group as a whole, but rather pick out the outperformers.

“When you drill into it, the real highlight and what’s driving a lot of this is the airlines so stocks like your Delta, Alaska Airlines,” Gibbs said Wednesday on “Trading Nation.”

The gap in earnings growth estimates for the group will further split their performances through the rest of the year, Gibbs said. Freight and logistics companies, for example, are expected to post 2019 earnings growth of 3.4 percent, the smallest increase of the group.

“Airlines have the growth of about twice the group as a whole and that’s really your strong suit so I’d say focus on your airlines,” added Gibbs.

United Continental and Delta both posted better-than-expected earnings earlier this week for their fourth quarters. United also gave upbeat guidance, though Delta’s profit forecasts fell short.

Disclosure: Erin Gibbs does not personally own shares of Delta and Alaska Airlines but S&P Global does.

Bill Stone never wavered from his bullish case during the market meltdown. “There’s no doubt stocks are cheap relative to bond side of the equation,” he said Wednesday on CNBC’s “Trading Nation.” Plus, Wall Street is now trying to calculate the impact of the historic government shutdown. However, Stone contends one major source of worry for Wall Street has mostly subsided: a Federal Reserve that was planning to raise interest rates several times in 2019. “We still like the consumer,” Stone said.

Bill Stone never wavered from his bullish case during the market meltdown.

And now, the Avalon Advisors chief investment officer is calling for a banner year for stocks.

“There’s no doubt stocks are cheap relative to bond side of the equation,” he said Wednesday on CNBC’s “Trading Nation.” “You could have a good market.”

Stone, who manages $6.6 billion, sees the S&P 500 surging more than 13 percent from current levels to at least 3,000 by year-end. The S&P all-time high is 2,940, hit on Sept. 21.

What could get the markets there? Stone said not much — just “decent news on the economy.”

He acknowledges the risks that helped spark the late 2018 correction haven’t entirely disappeared. There are still jitters surrounding the global slowdown, the U.S.-China trade war and Brexit. Plus, Wall Street is now trying to calculate the impact of the historic government shutdown.

However, Stone contends one major source of worry for Wall Street has mostly subsided: a Federal Reserve that was planning to raise interest rates several times in 2019.

“Part of the problem was the worry that the Fed was going to have a policy error, and throw us into recession. That has really receded,” said Stone. “The markets are assuming maybe no hikes.”

As a result, Stone predicts the most beaten-up groups from the correction could see a solid rebound in the coming months.

Despite a glimmer of hope for General Electric shareholders over the past month as the stock has rebounded, the analyst who called the initial collapse is warning the worst isn’t over yet. Tusa — who was one of the first analysts on the Street to put a sell rating on the stock in 2016 — changed his tune last month with an upgrade to neutral. “I don’t think we get back to the lows we saw back in December,” he said Tuesday on CNBC’s “Trading Nation. “But I do think long-term buyers will be able to

Despite a glimmer of hope for General Electric shareholders over the past month as the stock has rebounded, the analyst who called the initial collapse is warning the worst isn’t over yet.

Shares of the industrial giant were under pressure Tuesday after J.P. Morgan analyst Stephen Tusa warned investors of more “unfavorable” headwinds for the company as it heads into earnings later this month.

Tusa — who was one of the first analysts on the Street to put a sell rating on the stock in 2016 — changed his tune last month with an upgrade to neutral. The rare bullish rating sparked a surge in GE, and lifted by the broader market rally, the shares are now up more than 30 percent from the lows.

Matt Maley, equity strategist at Miller Tabak, said the stock is facing as key level as it rises just above its 100-day moving average, but the trend might not last. “I don’t think we get back to the lows we saw back in December,” he said Tuesday on CNBC’s “Trading Nation.

“But I do think long-term buyers will be able to buy [GE] at lower prices over the next month or so.”

“[GE is] getting overbought to the same degree that is has on several different occasions in the last two years, including kind of the key top in late 2016,” he said. “Each time we’ve reached that level, it’s rolled over.”

“[GE] was hit hard by a sell anything December and probably tax-loss selling,” he said on “Trading Nation.” “We think this is a classic mispricing of a security.” Bapis also suggested that although analysts believe the majority of GE’s value lies within its health-care and aviation units, the calculation doesn’t tell the whole story.

“It may not be straight up as it has in the past month, but we’re long-term buyers of it and if you look at the valuations and the fundamentals, they point to straight up,” he said.

“We do not see this as necessarily the bottom,” Gibbs said on CNBC’s “Trading Nation” on Wednesday. Stacey Gilbert, market strategist at Susquehanna, says her firm also has a negative view on the social network. “Our internet analyst Shyam Patel had a great call on this,” Gilbert said on “Trading Nation” on Wednesday. Options activity suggest Gibbs and Gilbert are not alone in their doubts over Snap’s future performance. Snap is one of the most heavily shorted stocks on Wall Street with short in

“We do not see this as necessarily the bottom,” Gibbs said on CNBC’s “Trading Nation” on Wednesday. “The fact that your CFO is walking away from 80 percent of the stock that he got as a signing bonus is a clear indication of how he thinks the company is going to go.”

That’s not all that has Gibbs worried about Snapchat’s parent company.

“The earnings estimates are actually going even lower in the past month and they weren’t that stellar to begin with,” she said.

Snap is expected to post a net loss of 19 cents a share when it reports earnings on Feb. 5, according to analysts surveyed by FactSet. In the same quarter a year earlier, it had reported a net loss of 28 cents a share.

“Certainly the stock could go farther down, and I wouldn’t say that this is the point to get in,” added Gibbs.

Stacey Gilbert, market strategist at Susquehanna, says her firm also has a negative view on the social network.

“Our internet analyst Shyam Patel had a great call on this,” Gilbert said on “Trading Nation” on Wednesday. “His concerns … continue to be that ad buyers are not seeing the return on investments that other platforms like Facebook and Instagram are doing and users are fleeing.”

Options activity suggest Gibbs and Gilbert are not alone in their doubts over Snap’s future performance.

“The flow we’re seeing is really more consistent with those that are protecting short positions, not any one positioning for longer-term growth here,” said Gilbert. “This is a negative. We’re avoiding it.”

Snap is one of the most heavily shorted stocks on Wall Street with short interest at 23.7 percent of its float.